On 24 September 2020, the European Commission (“Commission”) adopted a new Capital Markets Union (“CMU”) Strategy, which included as a key pillar “Building retail investors’ trust in capital markets”.
That commitment set in motion a sustained policy process aimed at addressing longstanding structural weaknesses in how retail investors across the EU access, are advised on, and are protected in relation to investment products.
What is the Retail Investment Strategy?
Following that strategy, the Commission formally proposed a Directive on Retail Investor Protection Rules on 24 May 2023, amending a suite of existing Directives in this area, including the Markets in Financial Instruments Directive (“MiFID”), the Undertakings for Collective Investment in Transferable Securities Directive (“UCITS Directive”), the Insurance and Reinsurance Directive (recast) (“Solvency II”), the Alternative Investment Fund Managers Directive (“AIFMD”) and the Insurance Distribution Directive (“IDD”). Alongside the Directive, the Commission also proposed a Regulation amending the framework for key information documents for packaged retail and insurance-based investment products (“PRIIPs”) under the PRIIPs Regulation.
The rationale for an omnibus approach, amending multiple Directives simultaneously rather than reforming each in isolation, reflects the Commission’s view that retail investor protection failures are systemic and cross-sectoral, and that fragmented sector-by-sector reform has historically produced inconsistent and overlapping outcomes across the financial services landscape.
The package is commonly referred to as the “Retail Investment Strategy” (“RIS”). Key policy ambitions across both instruments include: improving the quality of investment advice; addressing the treatment of inducements and commissions paid to distributors; establishing value-for-money benchmarks to ensure retail products deliver fair outcomes to investors; strengthening the content and usability of product disclosures (particularly the PRIIPs Key Information Document); and setting clearer standards for marketing communications.
The package does not create a new standalone legal framework. Instead, it reforms and aligns the existing regulatory architecture across the financial services sector, aiming to create a more coherent and consistently enforced set of protections for retail investors wherever in the EU they invest and whatever product type they choose.
Who is impacted by the Retail Investment Strategy?
- Financial institutions – including MiFID investment firms, AIFMs, UCITS management companies and IDD insurance firms that manufacture and / or distribute investment products to retail customers;
- European citizens who wish to invest in the EU capital markets – particularly retail investors who are cautious about moving their bank savings deposits into capital market investments due to a lack of financial literacy and understanding of the products available, how they work, and whether they offer value for money; and
- National competent authorities (“NCAs”) responsible for supervision and enforcement of the revised framework across Member States.
The legislation is of wide-ranging impact, affecting both financial institutions and European citizens, and it is hoped that it will bring further opportunities to invest for European citizens and businesses. Political trilogue agreement was reached in December 2025, with technical trilogues continuing into Q2 2026. Formal adoption is now imminent, so industry stakeholders will now be focused on transposition timelines, implementing measures, and guidance from the European Securities and Markets Authority (“ESMA”) and the European Insurance and Occupational Pensions Authority (“EIOPA”).
At a glance: the Retail Investment Strategy
| What it is | A legislative package to strengthen retail investor protection and encourage retail participation in EU capital markets, comprising a directive amending multiple existing financial services directives and a Regulation amending the PRIIPs Regulation (which governs the Key Information Document (“KID”) framework). |
| The legal instruments | A Directive amending existing Directives in this area, including MiFID, UCITS, AIFMD, IDD and Solvency II, together with a Regulation amending the existing PRIIPs Regulation. |
| Common name | “Retail Investment Strategy” (“RIS”) |
| Who it targets | Firms manufacturing and / or distributing products to retail investors in Europe, and European citizens who wish to invest in EU capital markets; the legislation is expected to bring further investment opportunities to European citizens and businesses. |
| Proposal date | Commission proposal published 24 May 2023. |
| Current stage | Political agreement reached between the European Parliament and the Council on 18 December 2025. The final technical text was endorsed by the Council in June 2026. Before it can enter into force, the technical text also needs to be confirmed in Parliament’s plenary. Indicative date: September 2026 session. |
| Key institutional leads | Commissioner Maria Luís Albuquerque (EPP / Portugal) |
| Matheson key contacts | Joe Beashel, Ian O’Mara, Sara Ross, and Brónagh Maher |
What does this mean for your business?
With the formal adoption and publication in the Official Journal expected in September 2026, the Retail Investment Strategy is close to the point of entry into force. It should be noted that there will be a transitional period before the substantive provisions become binding. The following points are most relevant for businesses operating in the affected sectors:
- Map your product and distribution model against the new framework. The Directive amends MiFID, the UCITS Directive, AIFMD, the IDD and Solvency II simultaneously, and the Regulation amends the PRIIPs Regulation. Businesses operating across multiple sectors will need to assess the impact of each set of amendments on their existing product suites, distribution arrangements and advice processes.
- Assess the implications of the inducements provisions for your distribution model. The strengthened inducement rules should be reviewed carefully against current business models.
- Prepare for the value-for-money assessment obligations. The value-for-money framework is expected to impose significant obligations on both product manufacturers and distributors of PRIIPs and IBIPs to assess whether products offer fair value to retail clients, assessed through relevant benchmarks. Firms should begin assessing what these benchmarks will look like and whether their current products and pricing structures are likely to meet the expected benchmarks.
- Plan for national transposition divergence. This legislation is likely to have wide-ranging impact on financial institutions and European citizens who wish to invest. Because the central instrument is a Directive, it must be transposed by each of the 27 Member States. Businesses operating across borders should monitor transposition proposals in each relevant jurisdiction closely, as national implementing measures may vary.
- Monitor Level 2 and Level 3 implementing work from ESMA and EIOPA. Key provisions, including cost benchmarks and further detail on firm’s “peer group” benchmarks, product oversight requirements and disclosure standards, will be operationalised through technical standards and guidelines from ESMA and EIOPA. The timeline and content of that implementing work will be critical for compliance planning.
- Engage during the national transposition phase. Given the wide-ranging impact of this legislation on both institutions and investors, the national transposition period offers some opportunity for industry to engage with Member State regulators and finance ministries on implementation. However, the more meaningful window for influence lies at EU level in the development of the Level 2 and Level 3 requirements. National engagement has its limits: Member States are ultimately required to implement within the confines of the Directive, and the Regulation will in any event be directly applicable. Businesses with a material stake in specific provisions, particularly on inducements, value for money and disclosure, should therefore prioritise engagement at EU level whilst remaining attentive to national implementation processes.
Frequently Asked Questions
The value-for-money framework was also politically contentious raising questions about regulatory intervention in product pricing. The Commission’s proposal to introduce cost benchmarks, developed by ESMA and EIOPA, against which PRIIPs and Insurance-Based Investment Products (“IBIPs”) products would be assessed for value was criticised by parts of the financial industry as constituting a de facto regulatory price cap. The calibration of those benchmarks, and the consequences for products that did not meet them, would be technically complex and commercially sensitive. The precise form in which this measure survives into the final agreed text is expected to require MiFID firms, AIFMs and UCITS management companies to create their own “peer grouping” benchmarks for PRIIPs that they manufacture or distribute, based on criteria to set by the EU. ESMA is expected to develop its own benchmarks as supervisory tools to supervise use of these peer group benchmarks by firms. In relation to IBIPs, EIOPA will set the benchmarks for IDD firms. The precise operation of these rules, with further underlying legislation still to come, will be a critical question for firms across all affected sectors.
The inducements debate was one of the most politically contentious element of the negotiations. The Commission’s original proposal envisaged significant restrictions on the payment of inducements (commissions) to distributors for investment products sold to retail clients, including a proposed ban on inducements in connection with execution-only sales. This proved deeply controversial, particularly among Member States with bank-dominated investment distribution models (including France, Italy and Spain), where commission-based distribution is widespread and a more restrictive approach was feared to reduce retail investors’ access to advice (and therefore, products). The negotiations involved significant political pressure, and the final agreed text is understood to represent a compromise on the original Commission position with no ban on inducements, but an enhanced inducements test to apply when inducements are paid or received and the ability of Member States to apply a ban at their discretion.
The omnibus structure of the Directive creates complex interaction effects. Because the Directive simultaneously amends MiFID, the UCITS Directive, AIFMD, the IDD and Solvency II, it introduces layers of interaction between different regulatory regimes that will need to be carefully mapped by firms operating across multiple sectors and product types. This is particularly the case between MiFID and IDD, which RIS has purposefully sought to bring further into alignment. Inconsistencies or gaps in how the amendments interact across those different frameworks may only become apparent during the national transposition phase, creating legal uncertainty for cross-border businesses.
PRIIPs reform faces persistent challenges around disclosure design. The PRIIPs KID has been criticised since its introduction in 2018 for being technically complex, difficult to compare across product types, and in some respects misleading to retail investors (particularly regarding the presentation of performance scenarios). The amending Regulation seeks to address these shortcomings, but designing a disclosure document that is simultaneously comprehensive, comparable, accurate and accessible for retail investors remains a significant regulatory design challenge.
National transposition will create a risk of divergent implementation. Unlike a Regulation, which applies directly and uniformly without national transposition, the central instrument in this package is a Directive. This means that the 27 Member States must each transpose the Directive’s requirements into national law. Given the political sensitivity of key provisions (particularly the value-for-money framework), there is a material risk that Member States use transposition flexibility to implement the requirements in ways that reflect national market structures, potentially perpetuating rather than eliminating the cross-border inconsistencies the RIS is intended to address.
Implementation sequencing and the role of Level 2 and Level 3 measures. The development and finalising of underlying technical standards, guidelines and benchmarking tools will be key to giving further clarity as to how some of the key provisions will operate in practice. The sequencing and timeline for that Level 2 and Level 3 work, and the consistency of guidance across the two authorities, will be a significant practical challenge for firms seeking to prepare for compliance.
The Retail Investment Strategy flows directly from the Commission’s Capital Markets Union Strategy of 24 September 2020, which identified building retail investors’ trust in capital markets as a central objective.
Research commissioned by the EU institutions had identified persistent structural deficiencies in how retail investors are treated across the EU: high product costs, inconsistent advice standards, opaque disclosure documents, and the influence of inducements on distribution decisions were all identified as factors working against retail investor interests.
The broader policy context is one of mobilising retail savings into productive investment across the EU. The Commission’s ambition is to create a deeper, more integrated capital market in which retail investors can confidently participate, thereby channelling private capital towards EU growth and the green and digital transitions.
| What the Commission is trying to achieve | What this might look like in practice |
| Build retail investors’ trust in capital markets | Delivering on the CMU Strategy commitment to “Building retail investors’ trust in capital markets” through a coherent cross-sectoral reform package |
| Ensure retail investors receive fair, unconflicted advice | Reform of the inducements regime with a strengthened “best interest” obligations for firms. Also increased harmonisation of the knowledge and competency requirements for advisors. |
| Ensure investment products deliver value for money | Obligation on product manufacturers and distributors to assess whether products offer fair value to retail investors, supported by cost benchmarking tools to be developed by MiFID investment firms, AIFMs and UCITS management companies, and by EIOPA in relation to IDD firms |
| Improve the quality and usability of product disclosures | Reform of the PRIIPs KID to make it more accurate, comparable and useful to retail investors across all product types |
| Strengthen marketing and advertising standards | New requirements on the content, presentation and targeting of investment marketing communications to retail clients, the need to have a marketing policy under oversight of the board and capturing the use of “finfluencers” for marketing into the regulatory perimeter |
| Broaden investment opportunities for European citizens and businesses | Enabling more retail investors to access a wider range of investment products with confidence, potentially increasing retail participation in EU capital markets |
| Create a consistent, cross-sectoral framework | Simultaneous amendment of MiFID, the UCITS Directive, AIFMD, IDD and Solvency II to eliminate inconsistencies in investor protection standards across different product types and distribution channels |
- 24 September 2020: Commission adopts the Capital Markets Union Strategy, including the objective of “Building retail investors’ trust in capital markets”
- 24 May 2023: Commission publishes its legislative proposal – a Directive amending MiFID, the UCITS Directive, AIFMD, MiFID, IDD and Solvency II, together with a Regulation amending the PRIIPs Regulation
- April 2024: European Parliament adopts its position, following work led by the Economic and Monetary Affairs Committee (“ECON”)
- 12 June 2024: Council approves its position
- June 2024 – Summer 2026: Trilogue negotiations between the European Parliament and the Council.
- 18 December 2025 – June 2026: Political agreement between the European Parliament and the Council was reached 18 December 2025, with technical trilogues continuing into Q2 2026. In June 2026 the Council formally endorsed the final agreed text.
- September 2026; The final agreed text needs to be confirmed in Parliament’s plenary. Indicative date: September 2026 session
- Q4 2028: If Parliament (as is expected) confirms the final text in September 2026, final rules can expect to be published in the Official Journal of the European Union in Q4 2026. Member States will be required to transpose the Directive into national law by Q4 2028, with the Directive and the Regulation applying 6 months later (Q2 2029). Note there are some limited provisions in the Regulation that will come into effect immediately on publication in the Official Journal.
The Retail Investment Strategy should be understood as forming part of, and closely interacting with, the Commission’s broader Savings and Investments Union (“SIU”) agenda, the successor to, and rebranded form of, the Capital Markets Union.
The RIS and the SIU are mutually reinforcing. The RIS provides the investor-facing protective framework, ensuring that when retail investors engage with capital markets, they do so on fair, transparent and well-regulated terms. The SIU addresses the broader structural and market infrastructure conditions, including pan-EU investment vehicles, barriers to cross-border investment, and the integration of national capital markets. Neither initiative is self-sufficient: a Savings and Investments Union cannot function effectively if retail investors do not trust the products and advice they receive, and retail investor protection rules alone will not generate the depth and liquidity of EU capital markets that the Commission is seeking.
Therefore, both agendas should be monitored in parallel. In particular, any developments in the SIU agenda that affect the range of investment products made available to retail investors, or that affect the conditions under which cross-border distribution of funds can take place, will interact directly with the disclosure, advice and distribution standards being set by the RIS.
Council:
- Minister Makis Keravnos (Cyprus) – responsible for concluding the file under the Cypriot Council Presidency.
- The Cypriot Council Presidency concluded on 30 June 2026. Minister Keravnos’s role was therefore limited to finalising the technical trilogues and preparing the text for formal adoption during the Cypriot Council Presidency term. As publication in the Official Journal of the EU will occur after 1 July 2026, formal adoption by the Council and publication will fall under the Irish Council Presidency (H2 2026, July–December 2026).
European Commission:
- Commissioner Maria Luís Albuquerque (EPP / Portugal) – responsible for finalising the Commission’s work on the Retail Investment Strategy.
European Parliament:
- ECON Committee – lead committee in the European Parliament.
- Stéphanie Yon-Courtin (Renew / France) – leading work on behalf of the ECON Committee as rapporteur.
